ACADIA Pharmaceuticals Inc. (ACAD) Earnings Call Transcript
September 12, 2023
Earnings Call Speaker Segments
Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have ACADIA Pharmaceuticals with CEO, Steve Davis; and Head of R&D, Doug Williamson. Welcome.
Thanks so much. We're pleased to be here. By the way, Mark Schneyer is with me, our CFO. Doug had a [ complication ] today.
For those who may not be as familiar with the ACADIA Pharmaceuticals, can you provide a brief introduction?
Yes, sure. Thanks much. So at ACADIA, we have 2 approved drugs in two different franchises. They serve as the foundation of the company. I'll take first, our NUPLAZID franchise in Parkinson's disease psychosis. Our drug, NUPLAZID, is the first and only drug approved to treat Parkinson's disease psychosis or PDP. PDP is -- differs from the way most antipsychotics are used. They're typically used to treat schizophrenia, sometimes they're used as adjunct therapy in depression. But they're not approved to treat Parkinson's disease psychosis patients or for that matter, Alzheimer's disease psychosis patients. NUPLAZID is, and NUPLAZID works through a very different mechanism, which gives it a very different profile that's perfect for these -- for this patient population of frail and elderly patients. So with the mechanism with NUPLAZID, we have a very favorable safety and tolerability profile and produce a very strong antipsychotic effect as well. So for NUPLAZID, we're doing well over $0.5 billion in sales now. That is a franchise that is -- is and has been profitable and cash flow positive on a fully burdened stand-alone basis since 2019. And our -- with every drug that you launch at a certain point in the life cycle, you shift your focus a little bit from top line to balance of top line and bottom line. We've done that successfully with NUPLAZID. This frail elderly population has been disproportionately impacted by the pandemic. But during that time, we've continued to gain significant market share and make the franchise more and more profitable. We've taken out over $100 million in spend in that franchise from 2021 to the amount that we'll spend this year. So again, very profitable, strong cash flow franchise. DAYBUE, also a product, first and only drug approved to treat patients with Rett syndrome. It's a highly debilitating disorder where patients progress relatively normally until about age 2, and then begin to deteriorate neurodevelopmentally. It's not neurodegenerative disease, but it's a neurodevelopmental. So the neurons have a degraded ability to communicate across the synapse. They don't die, which is very helpful because it means you don't have to treat patients before their neurons die. But they do have this very substantial loss of neurodevelopmental capabilities. So DAYBUE is the first and only drug approved to treat Rett syndrome where patients have a wide, wide array of highly debilitating symptoms. And we treat the core symptoms of Rett that is the neurodevelopmental symptoms, which many times are exemplified by loss of motor skill, loss of communication skills, stereotypy or hand slapping. And again, DAYBUE the first and only drug approved to treat Rett syndrome. We have announced almost a full quarter of sales in the second quarter, and 5/6 of a quarter, we reported $23.1 million in revenues for that quarter. We guided to $45 million to $55 million for the third quarter. And we'll continue -- plan to continue guiding on a quarter-by-quarter basis until, at some point, we will switch to annual guidance. So we're super excited about this launch, it's gone extraordinarily well. We expected demand to be high. It is. We expect it to be tempered by access and the ability to gain access. It has been, but not quite as much as we expected in the early days, so we're operating ahead of plan there. And again, this is a franchise that we also expect to become profitable and cash flow positive probably in a shorter time frame than it took with NUPLAZID. In addition to our 2 approved drugs in those 2 franchises, we also have a Phase III program in negative symptoms schizophrenia. The short version there is, we've accomplished something that's very rare in that disorder, where there have been a lot of failures, but a positive pivotal study in negative symptoms of schizophrenia. I'm sure we'll speak more about that through the Q&A. And we have a second study, second pivotal study that we have now fully enrolled. We'll have results from that study in the first quarter. In addition, we -- before the end of the year, we'll be starting a Phase III program in Prader-Willi syndrome as a result of acquiring a company last year. And we're very excited about the prospects there. More to come on that. And then in Phase II, by the end of the year, we'll also be in Alzheimer's disease psychosis patients with a next-generation compound that works in a similar fashion to NUPLAZID, our drug to treat Parkinson's disease psychosis. And with this molecule, we're first targeting Alzheimer's disease psychosis. So the objective in that program is to replicate the benefits of NUPLAZID and improve on them. And as we'll discuss more in Q&A, everything looks great in that respect, and we appear to be achieving all those objectives. We have a number of early-stage programs, some disclosed, some undisclosed that we're also excited about it, and we may touch on those as well. So again, a pretty broad portfolio of business development, I guess I didn't touch on it, continues to be a very important part of our business. DAYBUE is an example of some of the success we've had in business development. We acquired that asset after it had completed Phase II. And then earlier this year, we also -- we initially had rights to just North America, we acquired rights outside of North America and a further extension of sort of business development success we've had. And we're eager to get good moving in other countries as well. So with that, I'll turn it back over to you.
Great. Thanks, Steve. So let's start with DAYBUE. As you said, you had a strong start, pre-announcing 2Q sales above expectations, even though DAYBUE wasn't available until mid-April. So for those who may not have followed the DAYBUE story as closely, can you just highlight some of the initial metrics?
Sure. So as I mentioned, we expected demand behind and it is. So what we didn't expect when we launched is the access to be -- come a little bit faster than we expected. And in addition, we had a few centers of excellence. There are 18 centers of excellence in Rett syndrome by the way. A few of them had accumulated a number of patients which they were able to get scripts out to right away. So in other words, in the months prior to our launch, they anticipated approval of the drug and had already educated their -- those families, and they were prepared to get going. So we had an increase in the number of scripts and a positive benefit on the time it took to get access to those patients. And I think that's just a result of recognition that payers get it. They understand that there's no drug approved to treat this disorder. It is an extremely debilitating disorder. And so we were able to get access faster than planned. So we moved some of those patients at -- earlier in the queue than we expected. So today, where we stand -- so in the early days, 80% of patients were coming from centers of excellence and 20% from other sources that is high-volume institutions, many of which operate like a center of excellence, so they're academic, or large hospital networks and then community practicing neurologists. And today, where we stand is now over half of patients are coming from non-COE-treating physicians. We've continued to expand the breadth and depth. And on the bright side, we now have over 500 physicians that have written prescriptions, of course, meaning more than one for DAYBUE. And again, continuing to execute on giving patients access to therapy just as quickly as we can. And I think I mentioned already, but if I didn't, I'll just double-click on, from a plan perspective, if you think about it two ways, one is payers getting initial access, which when a new drug is approved in particular in a rare disease space where payers many times don't know a lot about the disease, it takes some while to become educated. They typically start most plans, start with a letter of medical exception or medical necessity. And that's the way most patients start. It's important to get to formal plans as quickly as you can, and they were ahead of plan. We're now up to over 70% of Rett covered lives now are subject to a formal plan by payers. So from all metrics that we look at, things have gone at least as well, and in most cases, significantly better than our initial expectations. So we're very pleased with that, and very happy to be in a position where you can give these families help.
What kind of feedback are you hearing from physicians on treatment duration and time to observe benefit?
So of course, in our business, you always look at what you observed in a clinical study and then sometimes that lines up exactly with what you see in human experience, and sometimes it doesn't. And of course, in a clinical study, you're following a protocol. And in rare disease, you often don't have the opportunity to do dose ranging and other things that you would in other areas where you have access to more patients. So in our case, we are seeing -- hearing reports, I should say, and a lot of this is anecdotes. So you want to be mindful that these are anecdotes, but we're definitely hearing about patients and physicians reporting benefits of the drug faster than we expected based on the clinical study experience. So that's obviously very encouraging. In terms of just overall feedback, physicians and caregivers have been extremely excited and supportive of the drug. So we're seeing a very, very, not only high demand, but very good response to drug. All drugs have safety or tolerability considerations to be mindful of and we do as well. Many of you are probably familiar with this data, but Rett patients typically have -- about 80% of them have constipation. It's usually quite significant. It can be very severe, can lead to hospitalizations, even a few reported deaths as a consequence of constipation and developing sepsis. In our case, with DAYBUE, the number of coincidental happens to be the same, but in our clinical study, about 80% of patients had diarrhea, 97% of it was mild to moderate. These patients also wear diaper-type garments their entire lives. But it's there, and so we made a couple of significant pushes, part of the launch, one in terms of just educating the patient community, caregiver community, medical community in terms of GI management strategies. Again, these patients have a lot of GI issues as a consequence of the disease. And then also, were successful in getting the FDA to align around very explicit description in the label of potential ways to mitigate or help manage GI issues. So for instance, one of the most important things is the day a person starts on DAYBUE, they should stop taking their anti-constipation medication. We've got that very explicitly in the label. So anyway, that's a long-winded way of getting around to saying that we're very encouraged by what we're seeing. It's too early in the launch to have any quantitative data in terms of overall persistence, but the feedback we're getting qualitatively is very, very encouraging.
Now mid-July, you indicated some patients had already received 2 refills. Any updates on the refill rate, average dose per patient or percent?
I've been talking...
Yes. Sure. Thanks. I mean all the right metrics to be looking at. Of course, we're looking at all of them. I think as Steve mentioned, many patients are -- through the guidance of their physicians, are titrating doses. I think a common regimen is that patients would start about half the dose, and over a 4- to 6-week period, kind of titrate up to either the recommended dose or the dose that gives them the best efficacy tolerability profile. So I think in this early stage of launch, when you think that dynamic and the first script that a patient will receive despite the physicians' intention to titrate will be at the full dose. So patient is getting a full dose for 1 month as an initial script and then may not be using it over the course of that full month, he may take them longer. So I think when we look at the data from all the patients that we have, we see scripts. We see conversion. We see refills. When you're looking at, if has a patient refilled on time or is it slightly delayed, well, there's kind of all the questions that you ask about compliance, persistency, average dosage kind of compounded in between all that. So I think at this stage, it's a little bit noisy. So it's hard, as Steve mentioned earlier, to draw any conclusions, but we'll -- that over the coming kind of months and maybe quarters will play itself out as we get to a more enduring patient population and be able to share some qualitative and quantitative metrics on how patients are utilizing the therapy. But qualitatively going back, it's just we're very thrilled with the performance, feedback that we're getting from physicians and caregivers and very excited about being able to continue to deliver this therapy to Rett patients.
Now as you mentioned, you guys provided 3Q net sales guidance for DAYBUE. Can you just talk about why you've decided to provide guidance so early on in the launch? And what factors influence the lower and the higher ends of the range for guidance?
Yes. I think maybe just to piggyback on kind of your prior question, there's -- there are a lot of inputs to a model here. And from a long-term basis, if you need to get to kind of ranges and thoughtfulness in light of clinical data, commercial performance, then the early stages, you can make wild assumptions that can get to very extreme answers that probably are not realms of reality or helpful. So I think from our standpoint, we thought it was most informative to the investment community to give more the answer than the input. And so that's what we've done in terms of our guidance for the third quarter. We've given some quantitative and qualitative metrics through our earnings, and we'll continue to do that and continue to evaluate the right information to share with the investment community. And what we're going to do in terms of guidance is we'll do this one go-forward guidance until such time that we get to annual guidance. And I don't know exactly when that will be. I suspect it will be sometime next year, but it may not be in the beginning of next year. But likely some time next year, we'll get to either guiding for the full year or the remainder of the year. And then going forward after that, just like NUPLAZID, we'll be providing annual guidance.
And then as -- you mentioned that you expanded your license agreement with Neuren, which includes ex-North American rights to DAYBUE. Historically, you've focused on the U.S. So can you talk about the rationale for extending your license agreement and what your plans are for DAYBUE outside the U.S?
Sure. So the instant rate of Rett is universal around the globe. The unmet need is very similar. Again, no drugs approved anywhere in the world other than the United States today with DAYBUE, they're drugs to treat core symptoms. So I guess, first and foremost, we recognize there's a significant unmet need there. And particularly, based upon the expected success that we would have in Rett and now the realized success that we're having, we were very eager to acquire the ex-North America rights as well. If we could have done that, the day we signed the original deal with Neuren, we would have. They weren't for sale. So we're very pleased to be with do that. It was a competitive process. It took us over a year to work through that process and come out successful. And it pencils out very well. I mean we're very, very pleased to be able to give the same kind of hope around the globe that families in the U.S. have. We are -- we'll be moving forward as expeditiously as possible. There is some foundational groundwork we need to do. In Europe, it'll probably take a couple of years to get to a point where we can look at an approved product. The requirements around, for example, around manufacturing are a little bit different in Europe than the U.S., so there's some work we need to do there. We need to seek scientific advice, which we'll do as quickly as we can and move forward. We believe that the package that we have should be very compelling and should be sufficient for an approval in Europe. But again, we'll seek scientific advice to confirm that. In Japan, many times, there is some additional clinical work you need to do, and so we'll be exploring that further as we move forward. And in other countries of the world, we'll be looking also to advance there as rapidly as we can.
Great. Let's shift to ACP-204. You completed a Phase I program with over 100 patients. How is ACP-204 differentiated from pimavanserin? And what are the key properties of 204?
So ACP-204, as I referred to earlier, our next-generation compound that's both chemically and biochemically, reasonably close -- closely related enough is, I guess, the way I would say it, to pimavanserin, to give it a different risk profile. And so it puts us in a position where we can compare in-vitro data 204, in-vitro data pimavanserin -- in-vivo data 204, in-vivo data pimavanserin. With neuropsychiatry, once you get to humans, there's a little bit of art to the science in terms of picking a dose and moving forward with it. And one of the principal things that we look at in CNS or neuropsychiatric drug development is receptor occupancy, what dose gives you full receptor occupancy. You can do radioligand on the drug and do a PET study to determine the degree of receptor occupancy you have in the dose unit, so with 204 and pimavanserin also able to compare receptor occupancy data. So given that -- those buckets of very useful information, it puts us in a position to be able to move aggressively with ACP-204. And so the clinical plan that we've unveiled is to run a seamless Phase II, Phase III program. And by that, I mean, we're on Phase II and then on a site-by-site basis, when a site has enrolled their last patient in the Phase II study, the -- they'll just keep enrolling, and the next patient will go into 1 of the 2 Phase III studies. This stays about a year on the development time line. Now again, I wouldn't do this with a new chemical entity and unvalidated mechanism, but given the significant body of data we have around pimavanserin, the ability to cross correlate that with 204, it's the right plan. So we're eager to get going there. As I mentioned earlier, the development objectives or the target product profile objectives with 204 were, first and foremost, accomplished the same benefits we see with pimavanserin. That is a very safe and well-tolerated compound with strong efficacy. Second, to mitigate or minimize or potentially completely eliminate the moderate QT signal that we see with pimavanserin. In schizophrenia that wouldn't be an issue. But in again, elderly, more frail populations, it's much more of a consideration. And all the data we have so far in now over 100 patients that we tested in Phase I indicate that we don't see a QT signal at this stage of development. We didn't see anything along those lines that would suggest that we should see something based on the preclinical work that we did as well. Last, pimavanserin, through this mechanism, takes about -- it's about 57 -- half-life takes 12 days to get to steady state. We wanted to be able to improve on that, so the patients begin seeing a benefit sooner. So instead of a 12 days to steady state that we see with convention, with ACP-204, it's about 5 days. So again, we've accomplished all of the objectives we have in this program. Just going back to receptor occupancy and in-vivo data and in-vitro data and the comparison we did between the 2 molecules, that data suggests to us that about 30 milligrams of ACP-204 would be equivalent to 34 milligrams of pimavanserin, the approved dose of pimavanserin -- the only approved dose of pimavanserin. In this -- but we couldn't go higher with pimavanserin due to the QT signal that was observed in -- with 204, again, we're testing 30 and 60. So that will enable us to accomplish another key objective we have, and that is to -- go to higher equivalent of to be able to see if there's more efficacy or faster efficacy that we can establish through this mechanism. So we appear to be in a position to do that as well.
Great. Moving to pimavanserin for negative symptoms of schizophrenia, yet developing drugs for schizophrenia is challenging, to say the least. We were reminded of the [indiscernible] update at the end of July. What steps have you taken to mitigate placebo response? And what gives you confidence in pimavanserin for negative symptoms of schizophrenia?
I'll try to do this quickly because I realize we're running a little bit short on time. So negative symptoms, as I mentioned, it's been a very frustrating, difficult, challenging area. We -- still nothing approved. We haven't moved the ball an inch in the last 4 decades. And we now refer to negative symptoms, I just want to clarify, with all antipsychotics that reduce the positive symptoms, the positive or the hallucinations, delusions, paranoia that these patients exhibit that we're all very familiar with. The negative symptoms that are more the social withdrawal aspects that are actually the symptoms that really keep them -- make it challenging to be in the workplace, make it challenging to live a normal life and much more impactful over the long run as opposed to the episodic positive symptoms they have. So negative symptoms, all antipsychotics that treat positive, will have at least a short-term, apparent benefit on negative symptoms, but those are not the patients we're seeking to treat. We're seeking to treat the patients that after you've established that and you've got them, their positive symptoms as well controlled as they can be, who continue to have predominant negative symptoms. That's about 40% to 50% of schizophrenia patients. To get a drug approved to treat those patients, you need to study them over a longer period of time, not the 6 to 8 weeks that antipsychotics usually are tested and approved on, but more like 6 months. So we're doing 6 months in those patients that already are well controlled, on the positive symptoms, stay on the same dose, on the same drug. And again, in our first pivotal study, we saw positive results there. In this study, the study is almost identical with 2 notable differences. One is in the first study, with a little bit of dose ranging, definitely saw a much stronger response at the high dose, that is the same dose that we approved at for Parkinson's disease psychosis, 34 milligrams in the study, we're only running the 34-milligram dose. And then secondly, it's well known, and many of you I'm sure have heard this from us and other companies, that it's increasingly difficult to separate from placebo in schizophrenia patients in the United States. And there's a lot of reasons why that -- we don't have time to go into here. And so we have enough patients, we believe, from the first negative symptom study. We don't need more U.S. patients. And so this study is being run entirely outside the U.S., and that should help the probability of success as well.
And so how are you thinking about the competitive positioning of pimavanserin within the schizophrenia landscape?
Yes. So I think the most important point of differentiation is what I just described. I know there's a lot of talk and we're very encouraged by some of the results we're seeing with non-dopaminergic new antipsychotic drugs on the positive symptoms. And of course, as we would expect, they are having some read through on negative symptoms, but that's not the patient we're pursuing. So that's -- those are patients where, for those drugs, they've been looking primarily at first-line therapy, displacing generic drugs. We -- for the persistent negative symptoms that exist after you've achieved that benefit, we would be adjunct to therapy there. So a very important difference. We're not trying to displace cheap generics where we'd be an add-on therapy to whatever antipsychotic that patient may otherwise be taking. That's probably the principal point of differentiation between our approach or the patient population that we're pursuing versus what you -- many times will companies talk about when they're talking about negative symptoms.
You're on track to report data from the second Phase III for negative symptoms of schizophrenia in 1Q. What's the bar for success for ADVANCE-2 and what do you need to see?
So I think in ADVANCE-2 having one pivotal study, positive pivotal study under our belt, if we have a positive study, I'll come back to what I mean by positive in a second, then we think we'll be in a very strong position to submit an sNDA to the FDA and seek approval. With neuropsychiatry, when you don't have approved drugs and you don't have an established clinical benefit that's well defined, again, there's a little bit of art to the science here perhaps. And so what we saw in the first study, when we looked at the 34-milligram dose, we saw a much strong response with an effect size of 0.34. That's a very good effect size in neuropsychiatry. So if we can accomplish, see something that we think is clinically meaningful, has a good effect size, and usually in neuropsychiatry, you think about that at 0.25, up to 0.3 or higher, then we'll be super thrilled. And again, we already know the tolerability and side effect profile of the drug. So I think we'll be in a very good position at that point.
Great. Your Phase III for ACP-101 in Prader-Willi syndrome will begin later this year. Can you just talk about the rationale for carbetocin treating hyperphagia. And then maybe talk a little bit about the study design.
Yes. So it's another area that's been tough. So it's been tough having clinical success here. The first thing I would say is so carbetocin is a derivative of oxytocin. And oxytocin, by the way, is not appropriate to try to treat Prader-Willi syndrome because Prader-Willi is a chronic disorder. Many times, people think of it as a metabolic disorder. It's not. And many of the drugs that have been tried tend to focus on kind of just pure appetite suppressant. It's really more of a behavioral disorder where you have just this unrelenting desire that you just can't get satiated. And so families many times have all their food, refrigerators, cabins everything under lock and key. It's extremely disruptive to the family and of course, to the patient. And so in this case, there's a significant body of data around the potential of using this mechanism through oxytocin, carbetocin, again, being a derivative, and the way it's administered is through an intranasal spray. And so we're very excited about the prospects here and eager to get our Phase III study up and running.
Great. Looks like we'll have to leave it there. Thanks so much for your time.
Thank you.
Thank you.
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